Apple Commands 92% of Profits in the Smartphone Market
Apple has been rapidly growing since the inception of the first iPhone. Although the company commands a higher price point, consumers have shown propensity to increase their willingness to pay. Here is a summary of Apple's dominance from the WSJ.
operating income from the world’s eight top smartphone makers in the first quarter, up from 65% a year earlier, estimates Canaccord Genuity managing director Mike Walkley. Samsung Electronics Co. took 15%, Canaccord says.Apple Inc. recorded 92% of the total... Apple’s share of profits is remarkable given that it sells less than 20% of smartphones, in terms of unit sales.
... One key to Apple’s profit dominance: higher prices. Apple’s iPhone last year sold for a global average of $624, compared with $185 for smartphones running Android, according to Strategy Analytics. In its fiscal quarter ended March 28, Apple sold 43% more iPhones than a year earlier, at a higher price. The average iPhone price in the quarter rose by more than $60 to $659, on the strength of the larger-screen iPhone 6 and 6 Plus models.
Can this growth be sustained or even increase? Are there any current or new companies that have a chance at taking down Apple?
Can it be sustained? No. No non-monopoly/cartel firm can sustain that level forever. Can it be increase? Sure, if hipsters and Apple worshippers keep multiplying.
There are phones out there better than iPhones but people are choosing brand over product. If Samsung/HTC/LG etc... find a way to do this Apple will need some serious innovation (i.e. not steal competitor ideas) or suffer.
This clearly shows the Apple fanboy contingent is full of suckers willing to shell out all their money for inferior specs on a gay white phone.
1 mistake people make about AAPL is thinking their target demographic cares about specs.
The last thing many non-iPhone users were holding off on was the screen size, and the 6/6+ hit that out of the park.
The ecosystem is really what gives AAPL the huge advantage over everyone else. iTunes + Mac/MacBook + iPhone/iPod/Tablet really has zero alternative as far as interconnectivity and ease of use. Especially ease of use. You can call people lazy all you want, but Apple products remove 2-3+ manual steps for simple stuff like syncing music, managing photos, sharing files, updates, etc and thats where the magic is.
I'm well aware everything Apple products do Google/Samsung/whoever else can also do, BUT they can't do it as easily and efficiently even if that means you have to manually launch an app, or manually select a setting, to get something done.
Its really more of a consumer lifestyle business than a tech company...
But nowadays everyone has an iphone. It's not prestigious if everyone has one.
Apple's dominance just proves how oblivious consumers are overall. No problem with me though. Anyone who's willing to pay 3 times the price for an inferior product deserves to be bamboozled.
As generation Y ages, more products and services revolve around one thing: convince. Fortunately for Apple, they are able to exploit this through their multiple interfaces. As @stryfe stated the target demographic doesnt care about specs, and honestly is probably oblivious to the fact that competitors have much better phones on the market. It will be tough to go up from here, but god would I love some strong competition to force Apple to innovate and come out with things like unbreakable screens.
I am by no means a Microsoft fanboy and I am not defending its corporate strategy over the past 25 years, but I find it ironic that so many people have criticized Microsoft's monopoly over desktop/laptop OS's and the so-called "Windows tax" while letting themselves get ripped off by Apple for years by buying its frequently inferior products.
I've had 4s/5s, and I switched carriers and phones to the Galaxy S5. It specs are far superior, but I honestly wish I hadn't switched away from iPhone. Their products are more reliable (Galaxy phone resetting issues), have a more streamlined ecosystem, and are a higher quality product (last longer). Whether or not they can maintain this position, I don't know, but Samsung & Co have leaps to make before they can match the entirety of the iPhone product.
I don't know how they did it but AAPL has distinguished the iphone as a luxury product and a statement of worth. its like a designer handbag at this point, if you don't have one people are judging you. cheers to apple to brainwashing us its impressive
True... but it is not like apple is the only company that has successfully been able to do it.. I suppose the underlying basis is to remove low cost products from your line up and / or enter a new market with only the premium offering thereby uplifting your brand's value in the new market.
case-in-point - mercedes benz - I feel like the general perception of that brand in overseas markets (US, asia, etc.) is that of a luxury brand. however, if you were to notice in germany, they really sell everything across the board.. trucks, minibuses, minivans, station wagons, sedans, etc... Though the brand is not considered 'cheap' in its home market, I doubt consumers associate that name with 'luxury'. Android instead went the way of toyota by having products all along the spectrum.
I had an iphone until not long ago and am on android now. I honestly think the perceived relative ease that apple boasts of is a thing of the past. It may have been true when android was just starting off but user experience is getting in the same ballpark in my opinion... more apps are being added to the android platform. Not that I find that lacking in any way, except for the fact that the robinhood app does not exist on android - but they say it is on its way. In fact, I have now gotten so used to the 'back' button on androids that I felt handicapped when i picked up an iPad recently.
If people considered the iPhone or other Apple products to be as luxurious and prestigious as a designer handbag, then why haven't we seen diminishing returns of iPhones as a % of smartphone users as Apple's penetration into that space grows?
Large market share of Coach handbags, or Michael Kors products, have proven to dilute the exclusiveness of the brand, and in return the end-market consumer moves on to something they view as more prestigious. We've seen what has happened to COH and KORS as a result of this...
I don't believe consumers view Apple products as a measure of prestige and exclusiveness, but rather as a standard. If that weren't the case, then consumers would drop their iPhone in favor of Samsung's niche "Edge" phone as soon as they saw 4/5 people in their lecture hall all had iPhones or Macbooks.
Great point. College students play a huge role in marketing for these guys and if you asked half of them why they chose Apple over Android, they probably couldn't give you a relevant answer.
I have some insight on this from working part-time at the Best Buy in my college town during the school year.
The reason why people (students and non) chose Apple products over Microsoft/Google/Samsung was mostly due to the perceived ease of use of the devices over others. If it takes your average person a longer time to learn an Android/Microsoft OS, even if its just 30 minutes - an hour of extra use, they're going to go with Apple.
Additionally, it just makes more sense for a college student, who probably already has a Macbook, to go with an iPhone. You could also flip that and sell someone a Macbook who already had an iPhone by workshopping the ecosystem.
I never met an Android user who could offer a legitimate rebuttal against Apple products that didn't have an argument on specs or the ability to super-customize your screen.
Apple doesn't really even offer that great of student discounts, sales, or package deals either. The consumer friendly nature of the products really speaks for itself when you take all of that into account and look at the resulting sales figures.
I was an Apple hater for a long time and still don't use their products but the valuation does seem low. Maybe people are hesitant to put a higher number on what is already the most valuable company, by I think double the next highest.
Dolore suscipit rerum aliquid et et et quae. Ducimus doloremque necessitatibus ipsum quas non nemo quidem. Sint voluptas qui beatae. Voluptatem minima laborum minima quis eius odit. Fugit omnis quos provident facilis nulla a consequuntur rerum. Ipsum occaecati omnis sequi consequatur harum. Qui eum aut illum facere nulla autem atque numquam.
Omnis omnis cupiditate rem earum esse quibusdam. Ut eum et pariatur dolore dolores nulla aut.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...